Thursday, November 11, 2010


We are reminded today of the brave men and women who have fought to protect our freedom. With poppies, moments of silence, and media coverage of public events honouring our heroes, today is a day for remembering. I find myself reminded today, also, of the man who taught me to remember.

Mr. Wayne Belanger was my high school principal. I recall the annual Remembrance Day Assemblies he led. As a young adult, I was mostly concerned about present day events and all things that revolved around me. I confess that I sometimes found these assemblies long and tedious and, while I understood from my history classes what he was talking about, I never full grasped the relevance.

It wasn't until years later, as I sat in a movie theatre witnessing the opening sequences of "Saving Private Ryan" that I realized what Mr. Belanger was talking about. These kids, who were only slightly older than us, were going to war, and suffering so that we could live in freedom.

So today, Mr. Belanger, I honour you, and others like you, for taking seriously your role as mentors to younger generations. And I take a moment of silence to remember those who have fought, and those who continue to fight - and sometimes fall - for freedom.

Wednesday, October 27, 2010

How to Find a Genius

Business has been great this year. So great, indeed, that I discovered I was in desperate need of a little help.

About a month ago I ran an advertisement seeking an Administrative Genius. I was immediately impressed by both the quantity and quality of the applicants. In less than 48 hours I heard from 40 people. One person wrote such a compelling cover letter that I had to call her right away. Six others also delivered exceptional cover letters and targeted resumes. I identified an additional four as "maybe's" for a possible second round of interviews. Five others I offered to refer to people in my network who were also seeking assistance. And twenty-four did not present well enough to merit further action.

There may have been some gems in those 24, but they never made it past the first cut. In case anyone is interested, here's how I narrowed the field:

  • Anyone who responded in less than 7 seconds (I'm exaggerating only slightly) did not hear from me. How could they possibly have diligently researched me, my company, and the position offered in such a short period of time?
  • Grammar, spelling, and formatting errors don't cut it - especially when the specific purpose of the position is to make an employer look good! One person told me they were "consciencious". (If you think about it a bit, it may have been a good idea to spell-check that word!)
  • I included a simple test in the offering: "Apply to with subject line: "Administrative Genius"". Missing this seemingly minor point is a good way to have your resume end up in the wrong file and demonstrates a lack of attention to detail or inability to follow simple instructions. (And, in my mind at least, a "Genuis" is significantly different than a "Genius".)
  • Templated Cover letters and non-specific resumes don't get far either. They sort of imply a lack of self-esteem.
  • Applicants get no extra points for cover letters or resumes that open with "What I want is... blah, blah, blah". No employer on earth cares about what you want until they have at least a faint idea that you might be suitable for what they want. If the employer is paying for the ad and your salary, try starting with helping them solve their problem. If you're successful, they will be more than delighted to give you what you want.
  • Finally, and somewhat curiously, not one applicant used any tool beyond a cover letter and resume to attract attention. For example, part of the posted job description listed management of Social Media. Doesn't anyone have a Facebook or Twitter account they'd want me to see?
I did have the pleasure of interviewing half a dozen very impressive individuals. For the most part, these people made flawless presentations, and were secure enough to take some chances by revealing a personality, rather than false professionalism.

Generally, I learned that one of the main attractors about my ad was that I described the position as one that would allow work from home and in the field, as well as flexible hours. In some cases, the candidate discovered through the interview process that there are trade-offs to this kind of freedom, and that perhaps they really were more suited to a little more structure.

Admittedly, I wasn't entirely certain of what I hoped to find. It is very difficult to describe an ideal position, and then seek to find the perfect person to fit that ideal. It is far more reasonable to find a good person and craft a position around them.

To all forty people who honoured me by responding to my advertisement: Thank-you! It takes great courage to put yourself out there. I know that there are many amongst you I would love to have met. I hope the comments above may in some small way help in your search. To those I met: a special thank-you. My inability to offer you a position at this time reflects more on my needs than your qualifications.

For my part, there is a happy ending. For the past eight months, I've had breakfast almost every Thursday morning with a group of people I've come to know and respect. A chance conversation with one of these people revealed an astonishingly good fit. On Monday, I met with my friend Blaine to begin planning how we could work together. I may introduce him more fully in a future post.

And that is how you find a Genius - look long and hard, but don't forget to look right in front of your nose!

Friday, October 8, 2010

Hey Buddy, Can You Spare Some Change?

How do you respond when someone approaches you in the street and says: “Hey buddy, can you spare some change?”

Even after all these years, I’m still not sure. Let me share a story with you, along with 3 propositions and 3 possible responses.

A few days following my 19th birthday, I boarded an airplane with a one-way ticket from Ottawa to Calgary. I had $100 in my pocket. Mine was a self-imposed experiment: Could I survive on my own?

Landing in Calgary, I immediately set about finding work. On the first day, I read 2 books at the library on oil drilling rigs. On the second day I presented myself at the office of every drilling company in Calgary. On the third day, I was on an airplane headed for a remote drilling rig about a hundred miles north of Fort St. John.

Working on the rigs paid well, so when I returned, I did so with several thousand dollars, which I immediately deposited into a bank account. I’d made it with $100. My next experiment was to try starting with nothing. My goal was to accumulate just $150 – the price of a flight back to Ottawa.

Well, I didn’t quite have nothing; before making my deposit I’d paid for 7 nights at the YMCA – a tiny room and a warm bed was welcome in February – twelve dollars a night.

The next morning I arose early and full of energy. I was about to prove that everyone who lives in poverty does so by choice and is simply lazy. I headed off to a temporary industrial employer. Sure enough, I waited around for about an hour, and then headed out on a bus to my first assignment. This was going to be even easier than I thought.

At the end of the day, I discovered something somewhat disturbing. I would receive my wages at the end of the pay period – 2 weeks from now! Two weeks! I only have a bed for one week. How am I going to eat?

A minor setback.

Back at the Y that evening I did some research. There was a street corner just a few blocks away where guys would line up first thing in the morning. Trucks drive by and pick up day labourers – and the best part was: they paid cash!

At $4 an hour I needed to work three hours to sleep inside. I dug ditches, I swept warehouses, I unloaded trucks, I cleaned construction sites, one time I even hosed out sulphuric acid sludge from a big white tank somewhere. I got a steak lunch for that one – and a rash!

If I had a choice between sleeping inside or eating, I always chose sleeping inside. Then one day I was carrying ceiling tiles from a stack to a work site. I noticed a workmate making about 1 and a half trips for every one of mine. He asked me when I last ate. “Three days ago”, I answered. My new friend told me where I could get a free meal.

The next morning I showed up at the Single Men’s Hostel. Before receiving a meal ticket, I had to meet with a counsellor. I remember he asked me how much money I had. I reached into my pocket, pulled out a handful of change, and answered: 67 cents.

That morning I discovered the gift of free food. I also learned that scary looking people aren’t so scary, up close. I learned that no one ever complained when the food was only lukewarm, and if the scruffy guy across the table was too hung-over to eat, he was never too hung-over to share.

After two and half months on the streets I learned something else too: It’s almost impossible to get ahead when you’re down. For the first time in my life, I truly felt despair.

My hypothesis failed. I eventually went back to the bank, collected my cash, bought a plane ticket, and flew home.

Here are my three observations:
  1. We are all poor. Rev. 3:17 reads: “You say: ‘I am rich; I have acquired wealth and do not need a thing.’ But you do not realize that you are wretched, pitiful, poor, blind, and naked.” People are fragile. Mental illness or an unfortunate string of events can put almost anyone out on the streets.
  2. We are all rich. Placed in global and historic perspective, almost anyone living in Canada is fabulously wealthy. We have access to social services providing food and shelter. Many parts of the planet don’t share this luxury.
  3. We are all the same. Proverbs 22:2 reads: “Rich and poor have this in common: The Lord is Maker of them all.
So what do you say when someone approaches and asks: “Hey Buddy, can you spare some change?” Here are three possible responses…

  1. “Spare some change?! Get lost!”
  1. My friend Jim, who lived on the streets for 3 years, says: “Don’t give it to them. Half will spend it on alcohol; the other half will spend it on drugs.” In Canada, homeless people have access to social services. But Jim would also ask you to treat all people with dignity. The only reason he no longer lives on the streets is because someone cared enough to love him when he was unlovable.
  1. The third response is yours: What do you do when someone asks: “Hey buddy, can you spare some change?”

Monday, September 27, 2010

Did You Miss Me?

I recently read somewhere that nearly 80% of all new blogs are abandoned within the first 90 days. I can certainly see how! Life gets busy, and frequently communication falls by the wayside.

As a pilot I learned that, when faced with a possible emergency situation, I should Aviate, Navigate, and Communicate - in that order! In other words, keep flying, figure out where you are, and tell someone. I wonder how well that translates to this journey we call life.

My last post here, Take a Break, was nearly eight weeks ago. Did you miss me? I guess I've proven my point.

I have two other blogs. On my SecretHomes blog I reveal real estate secrets and share stories intended to help people buy, sell, rent, or invest in real estate. On my Kingdom Business Group site I explore the integration of faith and work, and seek out virtuous business opportunities.

In an effort to free up some time to communicate more regularly on all three, I'm looking for a really good Administrative Assistant. I have some thoughts I'll share on that tomorrow morning...

I'm becoming a big believer in the value of sharing ideas and hearing from others, and I'd love to hear from you.

Thursday, August 5, 2010

Take a Break

Many years ago when I was a Maitre d', Gerry Gourmlay was one of my favourite waiters. However, I'd like to tell you about the one time he made me more than a little anxious.

The dining room was packed. All the other servers were busy in their sections, but Gerry was nowhere to be found. I searched everywhere and finally discovered him, relaxed and sitting on an overturned container outside the kitchen door, savouring a cigarette.

"What's the deal Gerry!?" I asked with, I'm sure, a trace of panic in my voice.

"Jeff, everyone in my section is happy. Nobody will miss me for 5 minutes." Gerry was right. Gerry was almost always right. When we do our very best in the service of others, we both need and earn the freedom to take occasional breaks.

Slow down a bit today. Take a break. No one will miss you for a few moments.

Friday, July 30, 2010

Tenant-First Rent-to-Own Investment Model

Executive Summary:
The Basic Residential Real Estate Investment Model demonstrates our ability to generate superior investment gains through prudent use of leverage secured against hard assets.

Rent-to-Own builds on this model by enabling a tenant to ultimately own a home they are renting. Advantages to an investor are many: reduced initial capital investment; increased monthly cash-flow; reduced maintenance and management; a predefined exit strategy; and quicker turnaround of capital.

Here’s how it works. A future purchase price is established in advance. The tenant/buyer pays a non-refundable deposit (option) securing their right to purchase at that price. This deposit becomes part of their future down-payment, along with any additional instalments. We then work with the tenant/buyer to help them qualify to purchase from us outright within one to three years.

This strategy is ideal for good tenants who would rather own than rent, but have not yet saved a full down-payment, or for those who may not yet qualify through traditional means. Tenant-First simply means that we find people, rather than properties. We allow them to shop and select a home of their choosing, and then negotiate and close on their behalf.

Why Work With Partners?
Ready access to capital and credit enables us to immediately begin selecting and working with prospective tenant/buyers. The Capital Partner benefits by participating in returns that would be otherwise unattainable.

I’m often asked if there are many of these deals out there. Of course not! If there were, everyone would be doing this. We use a variety of sophisticated lead generation systems including our website to attract and screen tenant/buyers. While the concept of rent-to-own may be more common than you would expect, closing deals requires knowledge, skill and ability.

There is risk associated with all investment activity

Case Study
This is the same property profiled in the Basic Model. Potential returns are better because the Initial Financial Contribution is offset by the option/deposit, and cash-flow is increased through regular down-payment instalments and by eliminating property management from the budget.

You will note that there is a fee for acquisition and project management. This covers lead generation and general costs associated with full-time attention to the investment.

These projections are based on actual rent ($1335/month); mortgage payments ($588/month); property tax ($1,380/year); and condo fees ($195.50/month). I have assumed that an additional $150 per month will be contributed toward down-payment.

CASE STUDY (Stonewood Village)
Appraised Value
Purchase Price
Tenant Deposit (minimum 3% of Appraised Value)
Acquisition & Project Management Fee (1% of Purchase Price)
Initial Investment (DP + cash to close + light renovations + fee - Tenant Deposit)
First mortgage (80% loan-to-value)
Second mortgage (VTB)
Year 1 cash-flow ((Rent + Additional Deposits) - PITC) x 12)
Year 1 cash-on-cash return
Year 1 mortgage reduction (35 year amortization; 2.75% variable interest)
Year 1 gain (cash flow + principal reduction)
Year 1 return on investment assuming 0% appreciation (gain / investment)
Estimated 3-year value (locked-in 3.5% annual appreciation)
Estimated 3-year mortgage balance
Estimated 3-year gain (value + cash-flow - deposits - mtg. balance - investment)
Estimated 3-year return on investment (3 year gain / investment)

Capital Partner:
The Managing Partner finds, negotiates, and administers the investment from beginning to end. A Capital Partner supplies initial capital and credit, is fully secured on title and, upon disposition receives return of all funds invested, plus participation in 50% of net profits, as fully described in the Joint Venture Agreement.

Using the Case Study above, the Capital Partner’s projected net gain and return on investment is calculated as follows:

Calculation of Capital Partner 3-Year ROI
Estimated 3-year gain
50% of 3-year gain
Divide by Initial Investment
Capital Partner return on investment (3-years simple interest)

This post is provided for information purposes only. It is not intended to solicit investors.

Saturday, July 24, 2010

The 22 Immutable Laws of Marketing

I recommend "The 22 Immutable Laws of Marketing", by Al Ries and Jack Trout, to absolutely anyone in business. Here are the chapter headings... or maybe you should just buy the book.
  1. It is better to be first than it is to be better.
  2. If you can't be first in a category, set up a new category
  3. It is better to be first in the mind than to be first in the marketplace.
  4. Marketing is not a battle of products, it's a battle of perceptions.
  5. The most powerful concept in marketing is owning a word in the prospect's mind.
  6. Two companies cannot own the same word in the prospect's mind.
  7. The strategy to use depends on which rung you occupy on the ladder.
  8. In the long run, every market becomes a two horse race.
  9. If you are shooting for second place, your strategy is determined by the leader.
  10. Over time, a category will divide and become two or more categories.
  11. Marketing effects take place over an extended period of time.
  12. There is an irresistible pressure to extend the equity of the brand.
  13. You have to give up something to get something.
  14. For every attribute, there is an opposite, effective attribute.
  15. When you admit a negative, the prospect will give you a positive.
  16. In each situation, only one move will produce substantial results.
  17. Unless you write your competitor's plans, you can't predict the future.
  18. Success often leads to arrogance, and arrogance to failure.
  19. Failure is to be expected and accepted.
  20. The situation is often the opposite of the way it appears in the press.
  21. Successful programs are not built on fads, they're built on trends.
  22. Without adequate funding, an idea won't get off the ground.

Saturday, July 17, 2010

Investing in Rent-to-Own Property

A Complete Guide for Canadian Real Estate Investors
Mark Loeffler (Mississauga, ON: John Wiley & Sons, 2010), 186 pages

Mark Loeffler’s “tenant-first rent-to-own” strategy is truly a winner for all parties! My only criticism is with respect to style so I’ll get that out of the way now: this book might have benefited from tighter editing. That aside, Loeffler clearly explains and outlines each step of this investment strategy in sufficient detail to be of tremendous assistance to any active real estate investor.

Part 1 lays a firm foundation for the chapters to come by providing compelling reasons why one should explore this approach, and then clearly and comprehensively describes how to start, and who you need to know.

Part 2 is a rich resource for identifying and sorting prospective clients, and one that should be referred to and mined frequently for continually growing a client list.

Part 3 briefly describes how to find and purchase property which is certainly sufficient for seasoned investors, but beginners would do well to seek additional education and coaching in this area.

Part 4 will be a HUGE time, money, and mistake-saver for most new rent-to-own investors! Both here and on his website ( Loeffler generously shares forms and contracts developed through his own trial and error.

This book wraps up with two helpful sections. The first, called Tenant FAQs, enables the investor stay a step ahead in the process. The second, Worst-Case Scenarios, attempts to alleviate fear and encourage action.

This title turns light reading on significant strategy. Loeffler does an adequate job of describing the rent-to-own process with a terrific tenant-first twist. I readily recommend this book to fellow real estate investors and thank Mark for sharing his experience and insight.

Friday, July 9, 2010

Do You Require Technical Assistance?

I have an absolutely brilliant friend named Eric. He is extraordinarily intuitive and has a natural gift for business. When I first met him about five years ago – among other qualifications – he had recently graduated from a program in information technology.

One day, when working on a project together, I was having difficulty with my computer and asked Eric what I should do. When he said he didn’t know, I responded in mock shock: “What did they teach you in school?!”

Eric told me he only learned two things:
1. Almost any computer problem can be solved by rebooting; and
2. Never patronize the client.

Eric has come a long way since then. I have had the distinct pleasure of working with him again over the past few weeks. When unable to view a website update in my browser, I received this response to my request for assistance:

“I would suggest clearing your cache, your cookies, restarting, turning off your computer, turning it back on, trying in a different browser, typing in the address manually, trying with and without the "www", changing your internet provider, calling the geek squad, and buying a new computer, not necessarily in that order.”

Of course, Eric was right – and I hardly felt patronized at all!

Saturday, July 3, 2010

Enter code: SAVE20 at Soundview Executive Book Summaries and take $20 off an Online Premium Subscription! Expires 7/31/10.

Getting Naked

A Business Fable about Shedding the 3 Fears that Sabotage Client Loyalty
by Patrick Lencioni (Jossey-Bass, 2010) 220 pages | Summary: 8 pages

It’s probably not fair to review a summary, so I’ll just offer a few quick impressions of the wisdom offered in this well-written Executive Book Summary from Soundview.

In only eight pages, the editor does a superb job of condensing the storyline of a fable while retaining the key points of Patrick Lencioni’s book.

In Getting Naked, Lencioni bravely introduces the themes of vulnerability and suffering into business practice by showing how humility, selflessness, and transparency -- for the good of the client -- make good business sense.

I especially appreciated Lencioni’s focus on relationship as rationale for giving business away, and his simple explanation for why having a bad client is worse than having none.

Getting Naked provides helpful perspective for Management Consultants, Financial Advisors and Professional Practices. Buy the book or subscribe to Soundview Executive Book Summaries to fast track your business reading.

Tuesday, June 15, 2010

The RRSP Secret

The RRSP Secret:
Defend and Build Your Wealth with This Powerful Investment Strategy
Greg Habstritt (Mississauga, ON: John Wiley & Sons, 2010), 236 pages

Greg Habstritt’s first book, The RRSP Secret, makes a significant contribution in the realm of personal finance in Canada.

This is not a novel, so I’ll give away the secret: the subject matter deals with investing in Arm’s Length Mortgages. “Why do you think the biggest financial institutions rely on mortgage financing as their bread-and-butter business? It’s because it is so profitable!” (70) Sophisticated investors have long used this strategy in their personal portfolios. Greg shows readers how almost anyone can.

Greg describes arm’s length mortgage investing as: stable and predictable; able to consistently produce double-digit returns with controllable risk; not requiring payment of commissions/fees to advisors/‘experts’; virtually immune to what markets are doing; and 100% eligible for your RRSP, RESP, RRIF, TFSA, and LIRA. (69)

The Introduction suitably sets the stage and provides a personal connection with the author. Many Free Bonuses are available by registering yourself as an owner of the book on Greg’s website (which also adds you to his growing database and impressive marketing machine).

Part 1, What the Financial Industry Doesn’t Want You To Know, is extraordinarily informative, readable, and intentionally disturbing.

Most readers will recognize themselves in a chapter devoted to investor bias. “Any time you invest in something you don’t understand, you’re gambling, not investing.” (7) Habstritt believes that “a direct indicator of how successful you will be in life (not just financially) is based on your willingness to be accountable for your results.” (9)

In this section Habstritt reveals how the financial industry really works and how the government uses RRSPs to generate tax revenues. He uncovers the unfortunate truth about the limited availability of truly unbiased financial advice, and turns some well-worn ‘truisms’ on their head. By way of example, here’s what Warren Buffet has to say about diversification: “Wide diversification is only required when investors do not understand what they are doing.” (43)

In Part 2, The Best-Kept Investing Secret for Canadians, Habstritt tackles the task of describing mortgage investing step-by-step, including finding and evaluating opportunities, setting terms, and managing risk. This section, while packed with information, is considerably less readable.

One of Habstritt’s challenges is that he’s addressing two audiences: lenders and borrowers. Happily, the end result is a balanced presentation useful for any party willing and able to sort through the comprehensive detail provided.

If you’re wondering if this book is for you, simply start at the back and read the short section entitled Conclusions, where Greg explains why he wrote it and shares two third-party success stories. I recommend Greg Habstritt’s The RRSP Secret to anyone willing to learn and employ one simple strategy to strengthen their financial future.

Thursday, June 10, 2010

It’s Not About the Speech…

A former mentor of mine, Floyd Wickman, who commanded speaking fees in the tens of thousands of dollars, once shared with me how he was able to almost mystically captivate his audiences. Would you like to know his secret?

I’ll give you a hint: It’s not about the speech – it’s about the audience!

Floyd explained that, in any audience, there are only ever ten people. Wouldn’t it be great if you knew everything you needed to know about all ten of them before you ever stepped up to a podium or onto a stage? Well you can…

Classic speaking theory suggests that most speeches fall into one of three general purposes: to entertain, to educate, or to motivate. Floyd showed me, that in order to really connect with your audience, you need to do all three – every time.


We all love to be entertained. For a speech to be entertaining, it doesn’t need to be uproariously funny; it only needs to be enjoyable and perhaps divert our attention for a few moments. As I write this, Shrek 3 is in theatres. Although I’ve not seen this one, it no doubt delivers a childlike storyline and moral for the kids, cleverly combined with more sophisticated diversions for mom and dad.


One of the most common purposes of a speech is to educate or inform. This involves helping people to learn about a new subject, develop a new skill, or learn more about a familiar subject. Many workplace speeches are intended to inform.


To motivate or persuade requires changing an audience’s attitudes or behaviours. Change rarely comes easily, so this can be one of the hardest tasks of a speaker. However, if done effectively, it can also be one of the most rewarding. Sales presentations and high level vision talks are good examples of speeches intended to motivate.

Your Audience

But it’s not about the speech; it’s about the audience. So who are these ten people in your audience?

The first three only want to be entertained. These may be your toughest customers. They already know everything they need to know about your subject – in fact they may know more than you do. What’s worse, these are the people that are already out there doing it! They certainly don’t need to be motivated. They may be asking themselves why they’re even wasting their time listening to you. Ah, but if you can entertain them, they could become your biggest fans.

The second three people only want to be educated. These people are hungry. They come with notepads and poised pens. They want to learn. So if you merely entertain or motivate, they’ll go away feeling cheated. But if you leave them with memorable information that will help improve some part of their life, they will be very glad they came.

The third three people in your audience only want to be motivated. These people are having a bad day, week, month, or year. They’re thinking: “I already know everything I need to know – I’m just not doing it! So don’t try to teach me and don’t just entertain me!” However, if you can move them to finally take action, they’ll love you forever.

And what about that tenth guy? Well, for whatever reason, no matter what you do, you’re never going to get through to him. He’s probably in the wrong room. Maybe he meant to attend a session down the hall and is just waiting for an opportune time to get up and leave without drawing attention to himself. You will never be able to completely satisfy everyone in every audience.


It’s not about the speech; it’s about the audience. Merely delivering a speech will get you only so far. Entertaining, educating, and motivating, combined with inspiration, will transform audiences. To inspire literally means ‘to breathe life into’.

Several months ago, Bruce Springsteen appeared with Elvis Costello on a wonderful show called Spectacle. Between powerful performances, Bruce described how he wants to write and perform in a way that connects with real people. There are loads of talented musicians, singers, and songwriters, but only a handful can do this. Bruce approaches his craft with a passion for transcendence by being “up in the heavens and connected to the earth” with “music that’s rooted, and at the same time, flying.” Arguably, Springsteen has succeeded.

Now breathe in. As you prepare your next speech, think about how to entertain, educate, and motivate every time, and begin to breathe life into your audiences.

Remember: It’s not about the speech; it’s about the audience!

Saturday, June 5, 2010

Wholesale-Hybrid Real Estate Investment Model

Executive Summary:

The Basic Residential Real Estate Investment Model demonstrates our ability to generate superior investment gains through the prudent use of leverage secured against hard assets. This involves acquisition, at or slightly below market value, of homes that are in generally good repair. These are essentially retail investments.

Wholesale investing involves purchasing homes, in need of more major repairs, at discounted prices and adding value through renovation. These opportunities are found through court-ordered sales or from otherwise motivated sellers. Acceptance of wholesale offers requires the ability to pay cash and to close quickly.

When renovations are complete and a qualified tenant is in place, new conventional first mortgage financing can be put in place. This means that an investor may then be able to extract up to 80% of the improved market value. Ultimately we are controlling the same asset, but with significantly less capital.

Adding value through renovation, and this more sophisticated use of leverage, translates into higher returns. Capital raised through refinance can then be redirected to the next project – thus recycling the down payment.

Why Use an Equity Partner?

This is by far the best question I have received. Real estate investors routinely target returns of 20-40%. They just don’t usually share them with you!

It is certainly possible to arrange short-term debt (bridge financing) through private or commercial lenders. Interest rates are naturally higher than conventional financing, but not unreasonable. The problem is that each deal requires at least some new capital, and additional credit when it comes time to refinance. Eventually I will run out of both.

An equity partner is in for the long haul and shares in gains through renovations, as well as cash flow, mortgage principal reduction, and appreciation. Ready access to capital and credit enables us to find and close better deals.

There is risk associated with all investment activity

Seasoned investors identify, mitigate, and manage risk. The lowest risk real estate investments are single-family homes. Townhouses have fewer variables when it comes to renovation – interior only – so there is reduced likelihood of error in estimates. We are minimizing down payment, but not equity, and we are fully secured on title.

These wholesale purchases do however require cash up front, and the luxury of conditions, inspections, and written estimates may be significantly lessened.

Case Study:

This is the same property profiled in the Basic Model. After Repaired Value and rental assumptions are the same. The reason returns are so much better is because of the wholesale purchase price, value added through renovations, refinancing, and most importantly, because the same asset is controlled with less capital.

Wholesale-Hybrid Model (recycling down payment)

After Repaired Value (retail)


Unconditional Cash Purchase Price (90% of ARV less Renovations)


Seller Financing


Closing, Carrying Costs & Contingency (3 months)


Full Interior Renovations


Initial Financial Contribution (Purchase + Renovations + Carrying)


Refinance with new first mortgage (80% loan-to-value)


Acquisition & Project Management Fee (2% of ARV)


Capital Investment Remaining after Refinance (initial + fee - mortgage)


Year 1 cash-flow (rent - PITCM)


Year 1 cash-on-cash return


Year 1 principal reduction (35 year amortization; 2.5% variable interest)


Year 1 gain (cash flow + principal reduction)


Year 1 return on investment assuming 0% appreciation (gain / investment)


Estimated 5-year value (assuming 3.5% annual appreciation)


Estimated 5-year mortgage balance


Estimated 5-year gain (Value + cash-flow – mortgage balance – investment)


Estimated 5-year return on investment (5 year gain / investment)


Capital Partner:

The Capital Partner’s projected net gain is calculated as follows:

Calculation of Capital Partner 5-Year ROI

Estimated 5-year gain


50% of 5-year gain


Divide by Capital Investment


Capital Partner return on investment (5-years simple interest)


A Final Note:

This post is provided for information purposes only. It is not intended to solicit investors.

Saturday, May 15, 2010

Twenty Twitter Tips

The following post is in response to a friend’s question: How Do You Get People to Follow You on Twitter?

The short answer is: It’s called social media; engage others and provide something of value!

Here are Twenty Twitter Tips to help you get started:

  1. Go to the Twitter Help page and read it;
  2. Read a few of the blogs on ‘How to Find Followers’, but don’t buy a program to automate!
  3. Fix your Bio (if it’s weak – or cliché); choose a great photo; state your location; and include a link to your website;
  4. Send invitations to people already in your database;
  5. If you haven’t already done so, download (free) TweetDeck or a similar application to manage your Tweets;
  6. Use ‘Hash Tag’ (#) searches to find relevant Users (i.e. #environment, etc.);
  7. Follow everyone you find interesting (there’s an initial limit of about 2,000);
  8. Search the ‘followers’ or ‘following’ lists of others you find interesting, and follow them;
  9. ‘Retweet’ (RT) interesting and relevant Tweets;
  10. ‘Mention’ (@) your Followers liberally; respond to, or comment on, their Tweets;
  11. Keep your own Tweets laser-focused (but stay human);
  12. Use Hash Tags to identify your tweets (if applicable);
  13. Participate (Tweet) often (but don’t overdo it);
  14. Use compelling titles for your blog posts and link to them in your Tweets;
  15. You should be blogging in your area of expertise at least once a week (keep it to approximately 300 words);
  16. Remember: Social Media introduces; Blogs educate; Websites/People sell;
  17. Provide your Followers with value: Contribute, contribute, contribute!
  18. Watch and emulate the Users you appreciate most;
  19. Keep it fun. Don’t become obsessed. It’s not a contest – just let it happen;
  20. Contact me if you’d like clarification on any of the points above.

Thursday, May 13, 2010

I Met Jesus in Kitgum

I met Jesus in Kitgum. Her name is Sandy. I don’t know what she looks like, but I’ll never forget the sound of her voice.

Four years ago, my friend David Collins, founder of Canadian Food for the Hungry, invited me to join him and small group of adventurers on a Vision Trip to Uganda.

Uganda is in east Africa. The northern part of the country has been ravaged by an ongoing, brutal, and senseless civil war. After arriving by airplane and spending a few days in the capital city of Kampala, we boarded a much smaller aircraft and headed north to Kitgum.

Kitgum is a tiny dusty town just south of the Sudan border. Home to numerous relief agencies, it’s a bit of a safe haven for victims of a war that has recruited thousands of children and forced them to serve as soldiers, porters, or looters.

Just before dark, we settled into our accommodations – a sagging mattress, a torn mosquito net, well-worn furniture, and a cold shower. I was a little apprehensive about sleeping in that room, but it was far better than what we would witness the next day.

In the morning, as we piled into our van, we heard rumours of recent ambushes on the route we’d be travelling. For the price of a case of cookies, we were in good hands – eight armed guards rode in the truck ahead of us.

That day, we visited two IDP camps and interviewed three brave survivors. IDP stands for Internally Displaced Peoples. These are like refugees – in their own country – who have been moved from homes scattered throughout the countryside in an effort to avoid attack from rebel forces. The theory is that there’s safety in numbers. The problem is that it’s almost impossible for these people to support themselves in camps.
One of the camps we visited was Padibe. A fire had recently torn through this camp, devouring the grass roofs of tiny huts that provide shelter. These people had lost everything – and then lost that too!

At Padibe, we heard from a young woman – now in her mid-twenties. Guilt and fear prevented her from speaking in much more than a faint whisper. Through a translator she told us how, as an adolescent, she was walking with three other girls from her village, on their way to work in a field, when they were ambushed by rebel soldiers. The soldiers warned them not to show fear, and in a twisted attempt to prove their point, shot and killed two other children in front of them. All four girls were terrified. Their punishment was that this young woman and one of her friends were ordered to beat the other two girls to death. From the lips of the translator we hear three dreadful words: “…and we did.”

The survivors were taken to a nearby rebel camp. But in the middle of the night, the beaten girls regained consciousness and crawled toward the sound of voices, looking for help. Our survivor and her friend were told to finish the job – “…and we did.”

For over twenty years, children have been abducted and forced to do unthinkable things. Girls are recruited as porters, looters, and concubines. Ten year old boys are lined up across from one another, given guns, and told to shoot the boy across from them. Those who survive become soldiers; those who don’t are called cowards. The threat is always the same: “After what you did, you can never go back.”

The broken young woman addressing us in the IDP camp eventually escaped during a raid and hid two nights in the bush before arriving in Kitgum.

But that’s not my story.

My story involves another young girl: Sandy. Sandy’s a Night Walker – one of hundreds of children who live on small farms with their parents, yet journey every evening to huddle together for the night on a concrete slab in the centre of Kitgum, in an effort to avoid abduction.

After an emotionally exhausting day in the camps, our group returned to Kitgum and, that evening, visited the Night Walkers. We were somewhat surprised by their enthusiastic welcome. These kids were clean, well-dressed, orderly, educated, healthy-looking, beautiful, gentle, and joyful.

I was tired and found a place to sit on a concrete wall. I remember the warmth of the wall and the warmth of the bodies around me. The black children seemed to fade into the blackness of the night. I heard a voice beside me: “My name is Sandy.”

We just sat there. Sandy’s fourteen. She sleeps on the veranda and has a twelve year old brother named Jacko. She showed me her school books and math homework. A ten year old entertained us. I played and teased with others as they crowded around. But I sat with Sandy.

Not far off, I heard voices that sounded like fun. I asked Sandy if she’d like to see what was going on, but she was clear:

“No, I just want to sit here with you.”

After a trying day, and in the midst of commotion, here was a friend who just wanted to sit with me. I couldn’t move. I wanted to stay there forever.

I don’t know how long we sat there, but eventually someone came to tell me it was time to go. I stood, and reluctantly said good-bye. I moved away from the wall and waited for the others.

But as I stood there I felt something. The breeze? My imagination? A gentle touch on my shoulder?

It was Sandy: “Mr. Jeff, are you coming back tomorrow night?”

I wouldn’t recognize Sandy to see her. It was dark, and she was dark. But she had a rich and gentle voice. I would remember that voice.

“I just want to sit with you.”

“Are you coming back?”